What is Bitcoin?

Bitcoin is a digital crypto-currency with no single point of failure due to its decentralized peer-to-peer architecture. The source code is publicly available and changes to the reference Bitcoin client are made via concensus within the community. Advantages of Bitcoin include irreversible transactions (i.e. no possibility of chargebacks as with credit cards),
pseudo-anonymous, limited and fixed inflation, near instant transactions, multi-platform, no double-spend and little to no barriers to entry and more. It was created by an anonymous person known as Satoshi Nakamoto. Find out more at WeUseCoins.com.

Bitcoin, Ethereum And The Parallel World Of Crypto-FinanceForbesThe bitcoin logo is displayed on an automated teller machine (ATM) at the Coin Trader bitcoin retail store in Tokyo, Japan, on Wednesday, Aug. 30, 2017. Stock of Bitcoin, the best-known digital currency, has surged 358 percent this year. While ...

Gold’s long, storied history as a prized precious metal dates back to ancient times. It garnered official status in the 19th century, when a number of European countries adopted the gold standard. Over the centuries, gold has achieved the distinction of being one of the rarest and in-demand assets on earth, leading to its reputation as a prized source and store of value.

Until more recent times, gold was used as money as well as the backing for other currencies. The term “gold standard” refers to a system where the value of a nation’s currency is tied to the quantity of gold it holds in reserve. But this system was abandoned over time, particularly with the U.S. decision to suspend the direct conversion of dollars to gold in 1971.

Due to its intrinsic value, gold remains in demand, and prices tend to stay relatively stable. In fact, historically, whenever there is a stock market crash, gold prices experience an upward climb.

Today, due to concerns about the devaluation of fiat currency, and given gold’s track record as an investment “safe haven,” investors are once again turning to gold. People are reassured by hard assets during times of economic uncertainty, meaning gold can be used not only as a leverage against inflation, but also as a hedge against hard economic times.

Minting a New Normal for Gold

As gold continues to see renewed interest due to its stable global standing, new questions are emerging in terms of how the cryptocurrency market can benefits from gold’s attributes.

Enter GoldMint, a blockchain-based platform which operates a new, gold-backed crypto-asset called “GOLD” — the value of which is based on physical gold. This decentralized platform assists gold owners in trades, loans and investments of gold as a means of realizing profitable returns. GoldMint facilitates this by purchasing, selling and repurchasing GOLD at the current market price for physical gold.

The company behind the innovative platform, which was launched in the beginning of 2017 and is headquartered in Singapore, utilizes exchange-traded funds (ETF) or physical gold (of 999 quality) as its security: GoldMint’s gold reserves equal or exceed its mined amounts of GOLD.

GoldMint co-founder Dmitry Pluschevsky — who, despite being only 36 years old — has been in the IT business for 20 years, and has developed and managed various types of other projects over the years.

“Many people get into difficult situations and getting a small loan is sometimes the only way to survive hard times,” Pluschevsky said of the importance of the platform. “But for various reasons, these people cannot go to the banks because they simply will not get a loan. They then might go to various microfinance agencies or mortgage lending networks, again without any luck. GoldMint gives those who have been cast out by the system the chance to get back on their feet. We believe that the technology that GoldMint is introducing to this market is a revolution, similar to the invention of the phone.”

GoldMint’s initial coin offering (ICO) launched on September 20, 2017. Investors can purchase MNT pre-launch tokens, called MNTP, for $7. As of late last week, the project had already raised $4 million.

Note: Trading and investing in digital assets is speculative. Based on the shifting business and regulatory environment of such a new industry, this content should not be considered investment or legal advice.

What Happens If China Bans Bitcoin Mining: 3 ScenariosInvestopediaMiners involved in the process must harness immense computing power to unravel these math problems that exhibit an increasing degree of difficulty in relation to the amount of Bitcoin already mined. In this specific case, a finite amount of coins ...

Today, at the Distributed: Health 2017 conference in Nashville, Tennessee, Change Healthcare announced blockchain solutions on an enterprise scale. According to the company, which is one of the major independent healthcare technology providers in the U.S., the utilization of blockchain technology will help their clients in boosting revenue cycle efficiency, improving real-time analytics, cutting down costs and creating “innovative new services.” Using the organization’s Intelligent Healthcare Network, Change Healthcare processes 12 billion transactions covering over $2 trillion in claims annually.

Change Healthcare CEO Neil de Crescenzo stated that the company is working together with both customers and organizations, such as the Linux Foundation’s Hyperledger Project, to make access to blockchain technology — and the benefits of the tech — and to develop “additional, advanced use cases.”

“We are excited to work alongside our customers and partners to make blockchain real in healthcare. As today’s healthcare system becomes more value-based, it’s essential that we aggressively and pervasively introduce new technologies into healthcare at scale — whether they leverage blockchain, artificial intelligence or other emerging capabilities with the potential to improve outcomes and efficiencies. We are initially introducing blockchain technology to create a distributed ledger that makes claims processing and secure payment transactions work more efficiently and cost effectively for all healthcare stakeholders,” Mr. de Crescenzo said.

“We want to make it easier and more efficient for health care as an industry to utilize this technology and make it a better experience for the consumers as well as the clinicians who don’t want to spend their time on the computer,” Aaron Symanski, CTO of Change Healthcare, told Bitcoin Magazine. “They just want to go out there and help more people every day.”

According to the company’s plans, blockchain technology will be implemented on the Intelligent Healthcare Network by the end of the year. Change Healthcare highlighted that their vendor partners and customers will not have to develop new code, interfaces or data formats.

Change Healthcare will utilize the Linux Foundation’s open-source Hyperledger Fabric 1.0 blockchain framework. Change Healthcare is a premier member of the Hyperledger Governing Board; therefore, the company will be contributing code innovations to the open-source community in order to improve blockchain applications in the United States and on a global scale.

“Change Healthcare is uniquely positioned to lead blockchain innovation for healthcare, and we are excited to participate in this transformative undertaking with them. With its security, transparency of transactions, and ability for all stakeholders to access the same information, blockchain technology has potential to increase payment accuracy and revenue velocity, which will benefit payers, providers, and consumers themselves,” Brian Behlendorf, executive director of Hyperledger, said in a statement.

According to Change Healthcare, today’s blockchain announcement is a part of a series of strategic actions taken by the company. In May, Change Healthcare joined Hyperledger’s premier membership as the first healthcare IT vendor. By implementing blockchain technology to the company’s services, Change Healthcare seeks to hold its position as a leading innovator along with accelerating the adoption and the development of blockchain and other innovative technologies.

What Happens to Cryptocurrency When You Die?FortuneA young man died suddenly in Colorado this year, leaving his family the burden of sorting out his estate. Little did they know their loved one had been investing in Bitcoin, the digital currency that cost as little as $13 in 2013 and recently climbed ...

Why China's Ban On Bitcoin May Be TemporaryForbesChina's ban on Bitcoin and other cryptocurrencies may be temporary, to appease international agencies and hardcore communist members ahead of the upcoming Communist Party convention. China's big government and banks cannot tolerate Bitcoin.

Imagine a country where you could live free without a central government telling you who to be, what to do and how to act. Roger Ver does, and he is inviting people to join him on a ground level in plans for creating a libertarian utopia.

The early Bitcoin investor andvoluntaryist (someone who advocates nonviolent strategies to achieve a free society) took the stage last week at Nexus Conference, a three-day event in Aspen hosted by the cryptocurrency platform Nexus Earth, to announceFree Society, a project aimed at raising money to organize the venture.

Ver, who is founding the project along with Olivier Janssens, another early Bitcoin investor, stated he has already raised $100 million, but hopes to raise plenty more.

As Ver explained to a surprised audience, who settled into their seats expecting a talk about Bitcoin Cash, he is currently negotiating with different countries to purchase sovereign land with the hope that fellow libertarians will begin populating the area in one to two years.

Bitcoin Magazinecaught up with Ver in Aspen to learn more about his ambitious plans for a free country.

Non-Country

Inspiration for the libertarian country or “non country,” as Ver called it, comes from David Friedman’s The Machinery of Freedom, a book that explores the idea of a society organized by private property, individual rights and voluntary cooperation.

Ver’s dream is to create a free society where people voluntarily abide by a set of rules they sign off on when purchasing a land title. “It will be a new experiment where it is the first time it’s been tried in the world,” he said.

The Bitcoin enthusiast hopes to raise more money for more land. “I think very realistically, we can raise half a billion dollars and maybe a billion dollars. If we have a billion dollars, we will have a lot more capital to play with for a bigger piece of land,” he said.

Right now, the seed funding comes from early Bitcoin and Ethereum adopters. “I’m one of them,” he said. He would not disclose who the others are, saying if they wanted to come forward, that was up to them.

But the general idea was to open the door to the public. “We were planning to have an ICO, but the regulators have kind of gotten in the way of that at the moment. But basically, we are working out the details as to how people can participate directly,” he said.

Ver added that this type of project is only possible due to cryptocurrency. “Thanks to cryptocurrencies, now there is a way to fundraise for people all over the world who are interested in this. Myself and my other friends all have a fair amount of capital now because of cryptocurrency. Dying with a pile of money isn’t any fun, so let’s make the world a better place,” he said.

Search for Land

But before he can build out his libertarian paradise, Ver and his team need to find some land to buy. He doesn’t see that as being an issue though.

“We have approached a number of different governments already, and we have actually been really surprised at how eager they are. Governments love money, and so, we will have to negotiate the final details.”

Of course, they have criteria. “We want to have a seaport, we want to be geographically close to other economic powerhouses so we have trading partners. We don’t want to be out in the middle of nowhere,” he said, adding that something close to Europe or South America or parts of Asia would be best.

Once they buy the land, the next step is putting the infrastructure in place. “When we auction off the land, we suspect a lot of the people who would be most interested in buying land will be development companies that will want to develop the land into big buildings,” he said.

Governance

The concept of libertarianism revolves around the idea that order evolves spontaneously, rather than through some central authority pushing out arbitrary laws.

Still, for many, it can be hard to imagine how that might work exactly. How will the country resolve disputes? What if someone gets out of line?

Right now, decisions are easy because so far only a handful of people are involved, said Ver. Otherwise, instead of laws, there will be guidelines similar to what someone might agree to before joining a condominium homeowner’s association.

“Everybody can do whatever they want within the guidelines, and they will be agreeing to the guidelines by the time they purchase in. There will not be a government. It will all be private institutions and private organizations,” he said.

The idea is to purchase land from a government that will allow sovereign behavior. “We are guessing that the governments will still try saying things like, you can’t export drugs, you can’t have nuclear weapons and that sort of thing,” he said, adding, “I think the main answer is there isn’t going to be some centralized institution imposing these rules. That is what we are trying to escape.”

He also emphasized that there would be no taxes. People would need to raise money for roads and other projects on their own.

Who Will Live There?

What will people do for work in the country? “We suspect it will be a lot of people working on the internet,” said Ver, adding that he thinks 90 percent of the population will come from the blockchain and cryptocurrency space.

And will citizens be forced to use cryptocurrency? “People will be free to use whatever form of money they want,” said Ver. But whatever the case, he made it clear, the time to act was now. “Life is short,” he said. “We want to move quickly.”

Blockchain healthcare company Patientory has been busy since Bitcoin Magazinefirst covered the organization in May.

The company, which is putting electronic medical records (EMRs) on an Ethereum-based blockchain for better security, has obtained funding and partnerships to help promote its concept. By the time it launches its enterprise solution, the company wants to give medical practitioners healthcare at their fingertips — and easy account settlement for patients and healthcare payers alike.

Patientory released its payment token, “PTOY,” on May 31. The three-day token sale raised $7.2 million from over 1,700 purchasers. The company is using the funding to launch its smart contract-based platform for EMR storage and patient payment processing.

“The healthcare system is fragmented,” explained Chrissa McFarlane, CEO of Patientory. As McFarlane pointed out, Patientory “really brings together the industry as a collective toward reducing costs and improving not only the U.S. healthcare infrastructure but the global healthcare ecosystem.”

Since its crowdsale, the company has focused on integrating with other networks to help build a decentralized ecosystem for healthcare participants. One of the most significant developments for Patientory came in late August when it announced its partnership with the Linux Foundation’s Hyperledger initiative.

Hyperledger follows the Linux Foundation’s model of building reference platforms for commonly-used technologies. What it did for Linux, it hopes to do for the blockchain. Just as there are multiple Linux distributions, the project will spawn a family of blockchain frameworks using code from a single reference platform, making it easier for the frameworks to interoperate with each other.

A key part of a smart contract-based platform is an oracle, an agent that derives information from a third-party information source; which Patientory will build to communicate with Hyperledger’s code.

But Hyperledger won’t be the group’s only such partnership.

“The future of the blockchain is that there will be multiple chains out there,” explained McFarlane. She expects to build oracles for those, too.

One of Patientory’s key goals is to integrate disparate processes in the healthcare system to produce end-to-end visibility.

“If we’re going to use the blockchain to really be the foundational layer for that interoperability, then the chains have to interact with each other and provide the same functionality,” McFarlane said.

The company is paying similar attention to payments integration. Blockchain-based digital cash network Dash has partnered with blockchain web services company BlockCypher to offer a grant program for organizations integrating their services. Patientory announced its participation in that program in August.

“Dash is purely digital cash, so we’re able to spearhead and accelerate the usage of digital currency for transactions in the health industry,” said McFarlane.

With this integration initiative, Patientory is focusing on healthcare payers. They can use the network for claims processing, finding patients securely and processing their claims transactions. Patients will also be able to use the system for settling payments.

Using the blockchain for payments between providers will drive efficiencies into a traditionally complex and bureaucratic system.

Patientory “decreases their transaction fees and overhead from an administrative level,” said McFarlane.

Patientory has been busy building relationships in other ways, too. McFarlane now chairs a blockchain working group; and July saw the company win an “innovation mention” in the #Patient2Consumer challenge organized by start-up network 1776 and the MedStar Institute for Innovation. Patientory is also active on the conference circuit and is involved in the Distributed: Health conference currently taking place in Nashville.

On the technical side, Patientory established its genesis block in July and launched its Alpha testnet.

Perhaps the biggest task facing the company now, though, is educating the market: It hopes to do so through the Patientory Foundation, the organization that orchestrated the crowdsale.

“A part of that at the Foundation level is to host events,” McFarlane said. “We promote the concept and providing an avenue for people to ask questions and learn about the process and how everything works in this space.”

The company is hoping to launch its enterprise solution and beta the 1.0 version of it by the end of this year. Its focus now is on proving its concept, scaling the platform and fostering adoption. The first half of 2017 may have been busy, but for Patientory, much is still to come.

Come November, the remaining signatories of the “New York Agreement” (NYA) plan to deploy the “SegWit2X” hard fork to double Bitcoin’s block weight limit, allowing for up to 8 megabytes of block space. Since not everyone supports this hard fork, this could well “split” the Bitcoin network into two incompatible blockchains and currencies, not unlike Bitcoin and Bitcoin Cash (Bcash) did two months ago.

But this NYA hard fork is controversial and not only because it lacks consensus. It’s also controversial because of design choices made by the development team behind BTC1, the software client associated with the New York Agreement. Perhaps most importantly, this development team, led by Bloq CEO Jeff Garzik, has so far refused to implement replay protection, a measure that Bcash did take. Partly for this reason, at least one NYA signatory — Wayniloans — has backed out of the agreement.

So what is replay protection, why should BTC1 implement it … and why doesn’t it?

What Is Replay Protection? (And What Are Replay Attacks?)

Bitcoin could see another “split” by November. (It’s arguably more accurate to consider the “splitting” nodes and miners as an entirely new cryptocurrency with a new blockchain and token — not an actual split of Bitcoin itself.) For the purpose of this article, we’ll refer to the blockchain and currency that follows the current Bitcoin protocol as “Legacy Bitcoin” and “BTC.” The blockchain and currency that follows the New York Agreement hard fork is referred to as “SegWit2X” and “B2X.”

If this split happens, the two blockchains will be identical. All past transactions and (therefore) “balances” are copied from the Legacy Bitcoin blockchain onto the SegWit2X blockchain. Everyone who owns BTC will own a corresponding amount of B2X.

Without replay protection, new transactions will be equally valid on both chains as well. This means that these transactions can be copied or “replayed,” from one chain to the other — in other words, for them to happen on both. This is called a “replay attack.”

So, let’s say Alice holds BTC at the time of split, which means she also owns B2X after the split. Then, after the split, she wants to send BTC to Bob. So, she creates a transaction that spends BTC from one of her Legacy Bitcoin addresses to one of Bob’s Legacy Bitcoin addresses. She then transmits this transaction over the Legacy Bitcoin network for a Legacy Bitcoin miner to pick it up and include in a Legacy Bitcoin block. The payment is confirmed; all is good.

But this very same transaction is perfectly valid on the SegWit2X blockchain. Anyone — including Bob — can take Alice's Legacy Bitcoin transaction and also transmit it over the SegWit2X network for a miner to include in a SegWit2X block. (This can even happen by accident quite easily.) If this payment is also confirmed, Alice has inadvertently sent Bob not only BTC but also an equal amount of B2X.

And, of course, all of this is true in reverse as well. If Alice sends B2X to Bob, she might accidentally send him BTC as well. A lack of replay protection, therefore, is a problem for users of both chains. No one wants to accidentally send any money — not even if it was “free money.”

Technically, there are ways to “split” coins on both chains to ensure they can only be spent on one chain. This would, for example, require newly mined coins to be mixed into a transaction. Tiime-locks can also offer solutions. But this takes effort and is not easy, especially for average users — not to mention that many average users may not even know what’s going on in the first place.

To avoid this kind of hassle, at least one side of the split could add a protocol rule to ensure that new transactions are valid on one chain but not the other. This is called replay protection.

In case of a split, at least one side must implement replay protection. But many — Bitcoin Core developers and others — believe there’s only one viable option. It’s the splitting party — in this case BTC1 — that should do it.

There are several arguments for this.

First of all, it makes the most sense for BTC1 to implement replay protection because that requires the least effort. BTC1 is a new client that’s already implementing new protocol rules anyway, and it’s not very widely deployed yet. It would be relatively easy for BTC1 to include replay protection.

Meanwhile, it would not be sufficient for Bitcoin Core to implement replay protection on its own. While it is dominant, and even considered by some to be the protocol-defining reference implementation, Bitcoin Core is not the only Bitcoin implementation on the network. Bitcoin Knots, Bcoin, Libbitcoin and other alternative clients would all have to implement replay protection, too. (And that’s not even taking non-full node clients into account.)

But even more importantly, the reality of the current situation is that all deployed Bitcoin nodes do not have replay protection implemented. And logically, they can’t: Some of these nodes even predate the New York Agreement. So even if Bitcoin Core and other implementations were to implement replay protection in new releases of their software, it wouldn’t suffice. All users must then also update to this new version within about two months: a very short period of time for a network-wide upgrade.

If only some of the nodes on the network upgrade to these new releases, Bitcoin could actually split in three: Legacy Bitcoin, SegWit2X and “Replay Protected Bitcoin.” Needless to say, this three-way split would probably make the problem worse — not better.

Lastly, there is a bit of a philosophical argument. Anyone who wants to adopt new protocol rules, so the argument goes, has the responsibility to split off as safely as possible. This responsibility should not fall on those who want to keep using the existing protocol: They should be free to keep using the protocol as-is.

Many developers — including RSK founder Sergio Lerner who drafted the SegWit2Mb proposal on which SegWit2X is based — have argued that BTC1 should implement replay protection. In fact, many developers think that any hard fork, even a hard fork that appears entirely uncontroversial, should implement replay protection.

But so far, the BTC1 development team will only consider optional replay protection.

What’s Wrong With Optional Replay Protection?

Implementing optional replay protection, as proposed by former Bitcoin developer Gavin Andresen, for example, is currently on the table for BTC1.

In short, this type of optional replay protection would make certain specially crafted (“OP_RETURN”) Legacy Bitcoin transactions invalid on the SegWit2X chain. Anyone who’d want to split their coins could spend their BTC with such a transaction. These transactions should then confirm on the Legacy Bitcoin blockchain but not on the SegWit2X chain. This effectively splits the coins into different addresses (“outputs”) on both chains.

Such optional replay protection is probably better than nothing at all, but it’s still not a definitive solution.

One problem is that the Legacy Bitcoin blockchain would have to include all these OP_RETURN transactions. This would probably result in more transactions on the network and would require extra data for each transaction. All this data must be transmitted, verified and (at least temporarily) stored by all Legacy Bitcoin nodes. It presents a burden to the Legacy Bitcoin network.

But more importantly, it would probably still not be very easy to utilize this option. It might suffice for professional users — exchanges, wallet providers and other service providers — as well as tech-savvy individual users. But these are generally also the types of users that would be able to split their coins even without replay protection. Average users, if they are even aware of what’s going on, would probably find it much more difficult to utilize optional replay protection.

Optional replay protection, therefore, offers help to those who need it least and does little for those who need it most.

Does the NYA Preclude Replay Protection?

While it’s unclear what was (or is) discussed behind closed doors, the New York Agreement seems to be a very minimal agreement. Published on May 23, 2017, it really only consists of two concrete points:

Activate Segregated Witness at an 80 percent threshold, signaling at bit 4, and

Activate a 2 MB hard fork within six months.

With the first point completed through BIP91, the only remaining point is a hard fork to 2 megabytes before November 23. (This assumes that this hard fork wasn’t completed with the creation of Bitcoin Cash which is supported by a number of NYA signatories.)

Notably, a lot of details are not filled in. For example, the agreement does not even state that signatories must specifically run the BTC1 software: Any software implementation that implements a hard fork to 2 megabytes might do. This could even include a software implementation that implements replay protection. And, of course, nothing in the NYA stops BTC1 from implementing replay protection; some signatories may have even expected it.

Why Won’t BTC1 Implement Replay Protection?

There are really several reasons why BTC1 — both stated and speculated — might not want to add replay protection.

This framing and choice of words is disputed. If SegWit2X were to implement replay protection (and if SPV wallets don’t upgrade), these wallets could still send and receive transactions on Legacy Bitcoin perfectly fine. On top of that, they wouldn’t accidentally spend B2X when they don’t mean to.

Meanwhile, if the SegWit2X chain does not implement replay protection (and if SPV-wallets don’t upgrade), users may not be sure if their wallet is receiving or sending BTC transactions or B2X transactions or both. They also may not be sure if the balance in their wallet is a BTC balance or a B2X balance or both. And if hash power moves from one chain to another over time, these wallets could even switch from displaying BTC balances to B2X balances or the other way round without users knowing. (This problem could be solved, to some extent, through another workaround, but this is not yet implemented in either.)

The only (plausible) scenario where implementing replay protection would perhaps not break SPV wallets much worse is if there is no Legacy Bitcoin to speak of. Indeed, the New York Agreement very specifically intends to “upgrade” Bitcoin, rather than split off into a new coin as Bcash did. And based on miner signaling and statements of intent by several big Bitcoin companies, some NYA signatories claim that Legacy Bitcoin will not be able to survive at all.

Implementing replay protection is, therefore, sometimes considered an admission that SegWit2X will split off from (Legacy) Bitcoin into something new and will not be considered the upgraded version of Bitcoin.

But the assumption that Legacy Bitcoin won’t be able survive is a big one. In reality, miner signaling is effectively meaningless, while Bitcoin Core — the dominant Bitcoin implementation — will not adopt the hard fork. There is also a significant list of companies that have not stated that they support the hard fork, including two top-10 mining pools. Similarly, it’s not clear if many (individual) users will support SegWit2X either. The implementation of wipe-out protection (another safety measure) also suggests that even BTC1 developers aren’t so sure that there will only be one chain.

And perhaps even more importantly, it’s not clear that replay protection would affect any of this. If miners, developers, companies and users are to consider SegWit2X an upgrade of Bitcoin, they will probably do so with or without replay protection.

This is why it has also been suggested that BTC1 is rejecting replay protection for the specific purpose of being as disruptive as possible. If the Legacy Bitcoin chain is effectively made unusable, SegWit2X might stand the best chance of being recognized as “Bitcoin.”

For more information and debate on replay protection, also see the the relevant threads on the SegWit2X mailing list.

Cryptocurrency-related cyber attacks are on the rise. As cryptocurrency continues to explode in value and public awareness, we can only expect this trend to continue. I was recently the target of such an attack. I also personally know of multiple other cases of the same attack being successfully carried out. Even worse, this type of attack is becoming ever more common and is likely to see an even bigger boost thanks to the professional excellence of firms like Equifax, making it an urgent topic as almost everyone is at immediate risk.

This article describes this increasingly common attack vector and provides immediate steps you can take to protect yourself. I will also provide additional tools and best practices to further safeguard yourself and your funds more generally.

As a computer programmer active in the crypto ecosystem since early 2013, I’ve always been too aware of the constant threat of cybersecurity attacks and the possibility that I could be targeted at any time. Cryptocurrency is the perfect hacker pay day. Once it’s transferred away from your control it’s gone forever, and it’s easily liquidated in any number of ways. Black hats are constantly prowling for possible cryptocurrency holders.

As such, I’ve always taken the minimum precaution of keeping my coins off third-party accounts, and have always advised others to do the same. But what I couldn’t prepare for was how unnerving being the target of an attack could be regardless of your level of preparation. The hypothetical can become reality in a matter of seconds, and you never truly understand the personal value of putting proper security in place until it’s too late. For those with enough at stake, it can be ruinous. Ultimately none of my funds were compromised by this attack, but others have not been so lucky.

“But not all accounts are created equal for data thieves — and the most valuable online accounts to steal are like the ones belonging to Mr. Burniske, who is a cryptocurrency fan. In the few minutes it took to get control of his phone, the virtual currency investor saw his virtual currency password change and its accounts drained of $150,000.” -PYMNTS

The Attack

It started when I received a text message from my cellular service provider alerting me that my SIM card had been “updated.” Included in the text was a number to call if this “update” wasn’t in fact authorized by me. I read this text several minutes after it had been sent, and by the time I called the number provided a minute or two later, my cell service and data were suddenly cut off by what I began realizing must be an attacker. Almost immediately, I was also logged out of my Facebook messenger window right before my eyes. With control of my phone number, my attacker had managed to quickly reset my Facebook password and gain control of the account.

As the reality of what was happening to me sank in, I felt an initial wave of panic. Suddenly, I didn’t know if the years of precautions I had taken amounted to anything at all. I had no idea how robust the attack was, how deep the attacker had penetrated my numerous online accounts or what my first reaction should even be. I momentarily feared the worst. Could my coins be at risk?

I forced several deep breaths. Thankfully my coins were not at risk via a phone, social media or email hijacking. Reminding myself of this eased my fears and allowed me to focus on going on the defensive and taking back control of my accounts as quickly as I could.

Using FaceTime from my laptop, I was able to get a family member to call the number provided by my cellular provider’s text message and initiate the process to eventually retake control of my phone number. Using an old email strictly used as an emergency recovery email for situations such as these, I was also able to lock down my Facebook account and regain control soon after.

What I discovered once I logged back in confirmed that the attacker had specifically targeted me due to my public cryptocurrency involvement. In the brief span of time they controlled my Facebook account, they had sent the same message to several friends of mine also involved in the ecosystem, many of whom I’ve known for years. The messages claimed I had an emergency and needed to borrow several bitcoins or the equivalent value in alternate coins for a day. The attacker was in the middle of sending out many more such messages to even more of my friends when I regained control.

At the end of the day, the damage done to myself was limited to being spooked. Unfortunately, however, at least one of the recipients of my fake Facebook messages was later the target of the same attack. I’ve decided to learn from these events and share those lessons, and hopefully help some avert the worst. First and foremost is eliminating this specific and trivially easy attack vector completely.

How to Stop It Before It Happens

Text message two-factor authentication (2FA) is the default security precaution for most online accounts today, and cellular service providers are woefully unprepared for this reality. It is almost trivially easy for an attacker to contact your service provider and pretend to be you.

In all the cases I’ve personally observed, it began with the attacker identifying an individual likely to have cryptocurrency and contacting their cell provider. They impersonate their target using personal information like social security numbers and home addresses from any number of possible leaks, Equifax being the most obvious and concerning source.

After successfully convincing your cell provider that they are you, they then port your SIM card to a phone they control. This approach is known as a social engineering attack, and with today’s common security default of using text messages for 2FA, they immediately have the keys to the kingdom. With your phone number they can now reset the password to any account you have with text 2FA enabled, including cryptocurrency wallets and accounts.

The minimal action you should take right now to prevent this: Contact your cellular service provider and request restrictions to be placed on your account so that no changes can be made to it without special verification. This can include setting a password on your account or requiring you to physically visit a store with your ID to make any account changes. Call again once this is in place and attempt to change your own SIM card as a test to ensure the restrictions have indeed been put in place and are being properly enforced by your cellular provider.

This simple step means that no matter what information an attacker may have on you, socially engineering a takeover of your SIM card is no longer a trivially simple endeavor. However, this precaution isn’t ironclad, and there’s also a variety of other attacks you can be the target of.

Taking It a Step Further

Black hat actors tend to focus on the low-hanging fruit, which is why the social engineering SIM attack has become so prevalent. But it is by no means the only way to compromise your accounts, and as the low-hanging fruit become harder to find, attackers will move on to these other methods. I highly recommend everyone implement these precautionary steps to further secure yourselves. The upfront investment needed to set up these measures may seem tedious now, but can pay invaluable dividends in the future.

1. If you hold any significant amounts of cryptocurrency, invest in an offline hardware storage solution.

These devices contain your cryptocurrency private keys and can remain completely disconnected from the internet or any computer until you need to make transactions, so that your funds remain totally safe regardless of any of your other devices or accounts being compromised. These devices include OpenDime, TREZOR and Ledger. Even if you do not opt for any of these solutions, at a bare minimum do not store funds on third-party services such as Coinbase or exchanges, especially on any service or wallet that integrates email or a phone number to authorize access to funds.

2. Ditch text messaging 2FA.

Placing verification restrictions on your cellular service account is a big step up in security, but can still be circumvented by an insider or even just a careless customer service rep who doesn’t do their job properly. Text message authorization is also still too incredibly insecure to be relied on in any way, period. Recent research shows that intercepting text messages is a trivial task for someone with the right tools, and many other exploits are likely to be discovered in the future.

The first item on this list will protect your personal funds from theft, but as I learned the hard way your money isn’t the only thing at risk. With access to your social media accounts and emails, an attacker can trick your friends into giving them funds or exposing themselves in other ways. They’ll also obviously have a clear look into all your messaging and file history on those accounts, which can expose you and your social circle even more. Shoring up your 2FA is a big step in preventing this.

Eliminate all of your text messaging–based 2FA and at a minimum replace it with Google Authenticator. However, like storing cryptocurrency, you can take it a step further with a dedicated hardware solution. I highly recommend YubiKeys.

You can configure many major online accounts (not Coinbase yet) to require you to physically insert and activate your YubiKey as your 2FA authorization, eliminating the risk of a remotely compromised phone.

3. Use multiple emails with interlinked recovery options, and use completely different and robust passwords for those emails and other online accounts alike.

Luckily I did not have text messaging 2FA enabled on the email account associated with my Facebook profile; otherwise my attacker could have seized control of that as well. If they did, I have a chain of recovery emails I could have used to regain control of it, all with different passwords. This practice also means that having your password being captured or leaked for any one of your accounts won’t jeopardize all of them.

4. Stay vigilant, stay paranoid.

To quote the Onion Knight, “Safety is never a permanent state of affairs.” Don’t get lazy and begin recycling passwords or leaving funds on Coinbase or other third-party accounts. Be aware of the technology you are using and the tradeoffs you are making or exposure you are generating by doing so. Stay up to date on the latest breaches, exploits and technology. Opt to use end-to-end encrypted messaging services like Signal, Telegram or WhatsApp. Don’t answer calls from strange phone numbers, and use apps like Hiya to filter out known spam numbers to reduce the risk that you do. Ultimately, however, there is no easy fix for security and no list that can guarantee you won’t get hacked.

Make no mistake, there are individuals out there who want to harm you and are actively working to do so. The time needed to reasonably secure yourself can seem tedious and time-consuming up front, but can easily and quickly become a priceless investment as I and many others have learned firsthand.

This guest post by Ariel Deschapell was originally published on Medium and is reproduced here under a Creative Commons License. The views expressed do not necessarily reflect those of BTC Media or Bitcoin Magazine.

To a complete outsider, the worlds of art and cryptocurrency do not appear to be linked. But for content creators of all kinds, blockchain technology provides an ideal solution to preserve intellectual property, create demand and increase value for digital content.

The digital revolution is often blamed for making life harder than ever for artists. We are always hearing stories of artists realizing their work has been ripped off by a major brand or that they are not being paid or credited for the content they create.

However, thanks to blockchains, ownership rights can be restored in favor of artists. The very digital landscape that proves so difficult for artists could well increase the possibility of profits for artists online.

Physical art was one of the first big applications of blockchain technology.

The concept of integrating blockchain technology into the art industry is not untested. Blockchains have already been a part of the physical art world for a few years now as a reliable way to verify creation and ownership details. The application of a trustworthy system of verification like the blockchain to artworks makes perfect sense.

A number of companies are actually already authenticating artwork with blockchain technology, including Verisart in Los Angeles, Tagsmart in London and Ascribe in Berlin. For both collectors and artists, they provide digital certificates of authenticity and provenance records that enable buyers to verify the authenticity of the artwork they purchase while creating an accredited ownership history for the artwork over time.

What blockchain technology provides is its unmodifiable digital ledger which logs every single digital transaction. More importantly, this ledger is public so everyone can see its history. This means, for example, that you can see that the painting you are interested in has been purchased three times from buyers in London, Madrid and Milan. Because the log is decentralized and cannot be edited, there is no potential for lies or trickery — no one can sell you a fake copy if a digital record of the authentic piece exists.

By allowing records like provenance, authorship and ownership to be unmodifiable, blockchain technology potentially solves the issue of forgeries and thefts in the art world. According to the FBI, billions of dollars worth of art and cultural property go missing every year. Being able to prove and track the ownership of artwork could make it almost impossible to resell stolen artwork in the future.

By increasing trust in the art world, blockchain technology could also help increase the value of art. One important factor in art is scarcity — it is what drives demand. People covet beautiful things: the more unique, the better. The Mona Lisa wouldn’t likely be worth $2 billion if there were 10 originals on the market.

Blockchain technology may pave the way for a robust new market of digital art.

The digital art and design world is arguably just as bad — or worse. While individuals can easily download a music file from a file-sharing website, it is even easier to screenshot or share digital art without any attribution or financial benefit for the artist. As long as people don’t consider digital assets “objects,” digital artists won’t be paid what their work is worth. However, being able to certify the ownership of digital assets through the blockchain could assure the value of digital art and change the behavior that it is okay to swipe art from the web without a thought. People already consume all kinds of creative content on digital screens, be it books, movies, media, or music. The time has come for them to value digital art they can appreciate just as thoroughly on their devices.

A new generation of blockchain-based art collections is bringing the digital art and cryptocurrency worlds together.

For many people, a painting on the wall is worth money; but a digital work of art online has no financial value. A new business model, however, is now emerging for digital art that could alter this perspective.

CryptoPunks by Larva Labs is one known example. The company has created 10,000 computer-generated digital characters, each one unique, with proof of ownership stored on the Ethereum blockchain. Each one is owned by a single person and verified by a smart contract. As the blockchain data is public, you can see exactly which of the characters have been purchased and which remain available. Some people have spent 10 ETH (around $3,000) on the rarest types of CryptoPunks on the secondary market.

This is just the tip of the creative iceberg. Imagine the possibilities with digital art created by actual artists becoming desirable and more valuable. In addition, artists who otherwise would have been forced to use a large-scale centralized company to distribute their work are now able to distribute their work in a decentralized way and receive fair compensation.

Soon, people may begin collecting digital art in the very same way they collect it in its physical form. This may also require a cultural shift in the perception of digital art and its value, but this cultural shift could well be instigated by applying technology, thereby adding financial value and scarcity to digital art. This may well turn out to be a significant boon in the lives of artists all over the world who will be able to profit and take control of their creative output and their intellectual property in a dynamic, budding market.

ICOs (Initial Coin Offerings) or token sales have seen a dramatic increase over the past year as a method for raising capital. According to CoinMarketCap, Bitcoin market capitalization sits at around $70 billion at the time of writing (even after the China ICO market correction), up from $11 billion in June 2016. Overall, the cryptocurrency market cap is now over $150 billion, roughly the size of Algeria or Iraq’s GDP.

Many organizations have, therefore, become interested in using token sales (aka ICOs and token generation events) as a way of raising capital. Mostly, companies look at token sales as a way to raise startup capital; they issue “utility tokens” to avoid being classified as a security. This method is in line with traditional “crowdfunding” that companies have been doing for many years.

I also believe there is a lot of pent up demand from traditional asset classes and established companies to utilize the blockchain to raise capital and conduct their business. This is because there are a many benefits for both the issuer and the investor.

For the issuer, it’s a frictionless process of raising capital that opens up a global market of potential investors. Costs of raising capital via this process can be a fraction of what it may cost to address the same size market with a traditional raise.

For the investor, it provides access to a wider range of investment opportunities, which a regular person may never otherwise have access to. Typically, there are zero or very low investment minimums, and one can easily participate in a token sale anywhere on the globe — just set up a wallet, buy some bitcoin or ether, and get in on time. As a bonus, there’s also often the existence of a secondary market where tokens can be traded after the initial token sale, thus providing fast liquidity to those that desire it.

However, the process is not without its challenges, and there are several things to consider when launching your next fund offering on the blockchain.

What are traditional asset classes and why may a blockchain be of benefit to them?

Traditional asset classes are those that generally come up when people talk about investments. They include stocks, commodities, real estate, private equity funds and derivatives, VC funds, REITs and others.

Most, if not all, traditional assets would fall under the SEC’s definition of a security, as stipulated by the Howey test. However, due to the decentralized nature of blockchains, the U.S. is not the only jurisdiction where tokens can be sold from; many countries around the world such as Switzerland, Cayman Islands, Estonia and others are stepping up to welcome ICOs, be they utilities or a securities.

So, how is blockchain technology and tokenization beneficial to traditional asset classes? Consider this example based on the logic illustrated by Stephen McKeon. If we take real estate as an example, it’s estimated that the size of commercial real estate in the U.S. alone is about $11 trillion. Let’s say 10 percent of that can be tokenized; that immediately puts over $1 trillion of liquidity back into the marketplace and removes an “illiquidity premium” which issuers are forced to pay because investors have no way to exit their investment for a number of years. This is a win-win for both the issuer and the investor.

Challenge #1 – Jurisdiction

Even if one decides to tokenize an existing asset, there are several challenges that must be addressed, and finding the right home for your fund is key. Since most traditional assets may be considered a security, finding the right jurisdiction will be very important during and immediately following your token generating event. Let’s take a look at some of the options available to us today.

The State of Delaware has a newly invoked law that will allow businesses to maintain shareholder lists and other corporate records on the blockchain. This move is even more significant when you consider that this jurisdiction is the corporate domicile capital of America, with 66% of Fortune 500 companies calling it home. If your plan is to make token holders Limited Partners or equity holders of your new fund, this may be a reasonable option.

Also in the U.S., Regulation A, Regulation A+ and Regulation D contain rules that could exempt entities selling securities from registering with the SEC, including a specific look at equity crowdfunding. These rules can be applied to any crowd sale, and potentially encompass token sales as well. It’s also possible to raise under Regulation S, which would exclude U.S. investors altogether, thereby removing the need for protection of unaccredited investors.

Switzerland, one of the leading centers of capital in Europe and known for recently abolishing its banking secrecy laws, has become a fintech hub and is considered a friendly jurisdiction. A number of leading Swiss companies have formed an alliance called Crypto Valley, where one of the most prominent law firms, MME, hosted a recent conversation about the legalities of token sales and what may constitute a security under Swiss law.

The Cayman Islands, a leading offshore jurisdiction with a 0 percent tax rate for foreign-controlled companies, have seen an uptick in ICOs lately. Recent token sales events from the Caymans include EOS, Domain Developers Fund and others. The Cayman Islands and other offshore jurisdictions have taken a friendly view on blockchain assets and have the service provider infrastructure in place, with lots of experience creating and operating traditional funds. I believe incorporating in the Caymans and other offshore jurisdictions have many benefits and is a practice that will continue to increase.

Estonia is another interesting example of a jurisdiction where several ICOs — which would almost certainly be considered securities in the U.S. — have been domiciled. Recently, Agrello, Polybius and a number of other companies completed successful token sales. Estonia is unique because of its e-government initiatives, which encompass e-citizenship, e-voting, e-tax and government blockchains. Further, Estonia recently announced its own cryptocurrency called Estcoin. Estonia currently doesn’t regulate crowdfunding (though some EU laws may apply) and is one of the top friendly jurisdictions for launching tokenized funds.

Challenge #2 – Knowing Your Customer

Another roadblock to conducting legal and compliant token sales is the issuer’s ability to follow KYC and AML regulations effectively. KYC (Know Your Customer) is the method in which issuers verify the identity of its investors. Many cryptocurrencies of choice for token generation events have anonymity features built in (cryptocurrencies such as Monero and Zcash are prime examples, and bitcoin can be anonymized as well). Further, the crypto investment community likes the idea of not having to go through lengthy and intrusive KYC processes. This practice doesn’t bode well for the issuer, however, since KYC is a key requirement for many banks. Strong KYC during the token generating event will make it easier to work with banks and follow AML (Anti Money Laundering) regulations.

Challenge #3 – Tax, Compliance and Custody

There are further complications with taxes, compliance and custody. There are not yet clear standards for cryptocurrency compliance to be followed. Further, if your fund is going to be holding crypto-assets and cryptocurrencies, security and custody needs to be considered. Luckily, there are some players such as Gemini that offer crypto-custody services; some reputable banks such as the Swiss Falcon Private Bank are also starting to offer bank-level cryptocurrency trading services. There are still more challenges around custody and compliance for altcoins.

On the tax side, there are open questions about treatment of virtual currencies. IRS guidance 2014-12 classifies cryptocurrencies as an asset class, imposing capital gains taxes on profits in certain situations. Some other countries such as Vietnam have proposed making digital currencies like bitcoin a form of currency. The world tax authorities still need more time to figure out how to tax this new asset class.

Challenge #4 – What Happens Next?

Once you’ve jumped through a lot of hoops and successfully executed a tokenization event for your fund, the real work starts. If you accepted U.S. investors, think about how you can prevent them from selling your tokens in the first 12 months (if you raised under Regulation D). If you didn’t accept U.S. investors, how do you prevent them from buying your tokens in the future? What exchanges do you want to list on to make sure you can comply with AML and other regulations? This is a complex process that needs to be thought of before you start planning your token generation event.

Looking to the Past

Launching a tokenized fund on the blockchain is a relatively new concept; however, we have some successful precedents. The biggest and most interesting example is Blockchain Capital, founded by Brock Pierce. Their token, BCAP, was sold under Regulation D exemption to 99 accredited U.S. investors (and unlimited foreign investors with many exceptions), who, per SEC regulation, can’t sell their tokens for 12 months. Blockchain Capital has a complex structure, with entities in Singapore, the Cayman Islands and the U.S. According to their memorandum, they spent up to 10 percent of their raise on legal expenses (they raised $10 million), which is a hefty sum. Also, questions remain: What prevents non-accredited U.S. investors from buying BCAP tokens post ICO? How are the 99 accredited investors forced to comply with the requirement to hold these tokens for the time allotted?

Conclusion

Launching token generation events for your fund can be a worthwhile activity, but you need to plan carefully and entrust your process to qualified professionals.

Some things to think about before going ahead with launching a tokenized fund:

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